Every year that investments grows, any further return is on a greater amount, which over time can be “very significant”. Jonathon Jay, Partner with DSW Wealth Planning spoke exclusively with Express.co.uk about little known facts that can contribute hundreds or thousands in retirement.
He said: “The biggest mistakes I see when reviewing client pensions is that they are not saving enough early on in life and not taking the right investment approach.
“If you are not thinking about retirement when you are younger, you are doing yourself a disservice.
“Investing early means that the long-term returns can be far greater.
“Each year that your investment grows, any further return is on a greater amount, which over time can be very significant. Please note, investment returns are not guaranteed and go down as well as up.
READ MORE: UK recession could be a ‘really good time’ for pensions to ‘grow in value’ – act now
“Don’t forget too, that pension contributions attract income tax relief – the standard 20 percent tax relief is applied to any contributions but higher or additional rate taxpayers can claim back the extra via their annual tax return.”
Mr Jay explained the importance of knowing what level of risk people have in their portfolios.
As bills continue to rise, many Britons may feel the need to dip into investments for some extra cash, however this could prove detrimental to the future.
Individual investment approaches should be carefully considered and run by a professional he said.
“The answer isn’t easy to work out.
“It will depend on factors such as what type of lifestyle you want in retirement, how much can you afford to save and what you would like to leave behind.
“Pensions and retirement are complex areas. Professional advice can be invaluable in helping you better understand what your future looks like and work out what is right for you!”
As well as the state pension, Britons may be receiving additional income from work place pensions or private pensions, or other investments they may have.
The full new state pension is £185.15 per week.
The full basic state pension is £141.85 per week.
If people do not think they can live on this, it is important they seek financial help to find out how they can find more retirement income.
The common perception is that people will need between half and two-thirds of the final salary they had when they were working, after tax, to maintain their lifestyle once they retire.
This is because those people who might have paid off the mortgage, will no longer be bringing up children and won’t face the cost of commuting once they’ve retired.